Tax change for pastoral farmers achieved
The Government is to pass a new taxation law that will clarify the deductibility of grassing and fertilizer costs, Agriculture Minister Jim Sutton said today.
Mr Sutton said the new law would minimize compliance costs and the complexity of tax laws for farmers.
The new legislation will:
- confirm the immediate deductibility of grassing and fertilizing expenditure that is not part of a significant capital activity on a farm, such as a dairy conversion;
- provide that grassing and fertilizing expenditure that is part of a capital activity is capitalized and amortised based on both having a useful economic life of three years;
- define a significant capital activity as one that changes the nature or character of a farming activity, and that to qualify, the changes must involve a programme of other work and physical improvements; and
- provide flexibility to set additional rates of amortization for grassing and fertilizing activities.
Mr Sutton said the law changes were a welcome solution to the confusion that had arisen around this issue.
"It had raised justifiable concerns among rural tax practitioners and in the farming community. However, I think Dr Cullen's response will ameliorate those concerns completely."
Contact: Cathie Bell on 04 4719855 or 027 4998467